WASHINGTON (dpa-AFX) - Crude oil advanced on Tuesday as sign of easing U.S.-China trade friction overrode the effects of gains in the U.S. dollar and excess supply concerns.
WTI Crude Oil for November delivery was last seen trading up by $0.38 (or 0.66%) at $57.90 per barrel.
The trade relations between the U.S. and China are undergoing a lot of twists and turns.
China, which has a stranglehold on rare earth minerals, enforced stricter norms on their exports to other countries, including the U.S., where manufacturing and technology companies are heavily reliant on these crucial elements.
Angered by China's move, Trump threatened a new 100% tariff on China and suggested he would skip a meeting with Chinese President Xi Jinping to be held in South Korea later this month.
As U.S. and China are the world's two largest economies and major consumers of crude oil, the friction dented crude oil prices.
Last weekend, softening his stance, Trump acknowledged that high tariffs on China are unsustainable and expressed willingness for smoother relations with China though he insisted China should make moves to favor the U.S.
Further, Trump also affirmed that he will be meeting Xi in South Korea this month as scheduled. However, he warned that failure to strike a deal with the U.S. could see China facing around 155% tariffs.
Indications of a truce between the two major economies overrode concerns of oversupply from recent reports.
The U.S. dollar index moved higher today and was last seen trading at 98.91, up by 0.30%. Strength in the dollar impacted crude oil prices.
To end the Russia-Ukraine war, Trump is set to meet the Russian President Vladimir Putin in Budapest, Hungary, even though exact dates have not been officially announced.
Even while supporting Trump's attempts to end the war, European leaders are united in their stance that Russia is not serious about peace.
Yesterday, in a meeting in Luxembourg, energy ministers from the European Union agreed to halt Russian oil and gas imports by 2028. This proposal must be approved by the European parliament to take effect.
Crude oil prices were under pressure as supply and demand projections by the International Energy Agency and OPEC were strikingly divergent, making it difficult for traders to make sense out of the data.
In its latest outlook last week, the Paris-based IEA expanded its prediction of a 2026 surplus from around 3.3 million barrels per day last month.
For 2025, it projected a supply rise by 3.0 million bpd and for 2026, a further rise by 2.4 million. The agency also pruned world demand growth for this year to 710,000 bpd, down by 30,000 from its previous estimate.
Meanwhile, OPEC, in its monthly report, reaffirmed the solid growth expectations in the global economy and maintained its estimates for demand to increase by 1.3 million bpd in 2025 and at a higher pace in 2026.
In the U.S., the government shutdown entered day number 21.
As the closure stretches to its third week now, along with 750,000 federal employees furloughed, now around 1,400 U.S. nuclear weapons workers placed on unpaid leave could face mass layoffs, disrupting the maintenance of U.S. nuclear arsenal.
With the U.S. Federal Reserve's next meeting scheduled for October 28-29, amid the ongoing economic uncertainty, markets are pricing in a rate cut by the Fed.
In the Middle East, phase one of Gaza Peace Plan brokered by Trump has been executed without a blockade.
On Sunday, Israel engaged in airstrikes in Gaza, accusing the Palestinian Hamas militant group of breaching the ceasefire even though Hamas denied the allegations and ensured its commitment to truce.
While Trump stated that he felt that Hamas would do what is right, he also issued a stern warning to the militant group that if it fails to uphold its part of the agreement, the group would face a 'fast, furious, and brutal' end.
The peace established in the Middle East is building to be a long-lasting one and supportive of a streamlined and secure oil and energy transit.
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